Gates Boots Up His Giving

$100-million grant to immunize kids reflects desire to bridge rich-poor gap

Microsoft founder Bill Gates has stepped up his philanthropy in recent weeks, providing the clearest window yet into how he will fulfill his longstanding pledge to give away the vast majority of his immense fortune.

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At the end of October, the software tycoon, who is worth an estimated $65-billion, quietly contributed $1-billion to his William H. Gates Foundation to mark his 43rd birthday. The gift doubled the fund’s assets, turning it into one of the country’s 25 wealthiest grant-making institutions.

And this month, at a press conference here, Mr. Gates and his wife, Melinda French Gates, announced that they would give $100-million to a Seattle charity to speed up the time it takes for new vaccines to reach children in economically depressed countries.

At first glance, the most recent gift seems to be a radical departure for the couple, who made their first significant foray into philanthropy by announcing 18 months ago that they had created the Gates Library Foundation, a $260-million effort to help public libraries make Internet-accessible computers available to their patrons (The Chronicle, July 10, 1997).

But the link that ties the two efforts together is what the Gates family says will drive its giving in the future: a desire to shrink the gap that increasingly prevents poor people from being able to take advantage of crucial developments in science and technology.

“Everything we’re doing is about making these great technologies, whether it’s computers or medicine, more broadly available to people,” Mr. Gates explained in an interview.

To some observers, this month’s announcement of a substantial donation to help children seemed to have as much to do with polishing the image of Mr. Gates and Microsoft as it did with altruism. The company is defending itself in a federal court in Washington, D.C., against charges by the U.S. Justice Department that Microsoft took illegal actions to insure its dominant status in the technology world.

But Mr. Gates flatly dismisses criticism that his recent giving was connected to any public-relations campaign to influence the trial proceedings. “As soon as we saw this opportunity, we got very excited,” he says of the vaccine effort. “There’s always going to be things going on in the Microsoft world in parallel, so you can’t wait until after that calms down.”

Regardless of the timing, the $100-million vaccine-related grant to the Program for Appropriate Technology in Health, known as PATH, marks a major new development in the Gates family’s charitable interests and approaches to grant making.

The Gateses’ work as executives of a global company — the two met at Microsoft, where Melinda worked as a manager until 1996 — has helped focus their attention on international causes. Also, as new parents, the couple have become more attuned to the needs of children. They have a 2-year-old daughter, and their second child is due to be born in June.

Through their talks with health experts, the Gateses say they learned that vaccine costs have risen considerably in recent years. One reason: Governments are covering less of the research costs than they have in the past, leaving private pharmaceutical companies to try to recover their costs by charging high prices during the first years that a product is on the market.

Gordon Perkin, PATH’s president, says vaccines developed today are often out of the reach of many governments for as many as 15 years after development.

Such a large gap between the protections available for children who live in a rich country versus those available for kids in poor nations is “completely inexcusable,” Mrs. Gates said at the ceremony to announce the grant.

The PATH grant is aimed at greatly expanding the distribution of vaccines that prevent four illnesses that together are blamed for the deaths of more than 2 million children each year. The diseases are Haemophilus influenza type B, hepatitis B, pneumococcal disease, and rotavirus disease.

About three-quarters of the $100-million donation will be funneled to other groups, including the World Health Organization and UNICEF.

The money will be divided among three main areas:

* Studies to determine how widespread the diseases are within various countries, as well as how effective vaccines might be in combating local strains of particular diseases.

* Demonstration projects to show countries how they can most effectively add new vaccines to current immunization programs.

* Efforts to develop new financing mechanisms, such as working with the World Bank to come up with long-term, interest-free loans that countries could use to buy new vaccines. The Gates program also plans to work with pharmaceutical companies to find ways to lower vaccine costs.

Gustav Nossal, an Australian scientist who chairs the World Health Organization’s committee on vaccines, called the Gates donation “a galvanic new factor” in the delivery of vaccines worldwide. He said the gift has the power to reinvigorate international vaccine efforts, which he believes have suffered in recent years from a lack of money and a sense of complacency now that 80 per cent of all children receive six basic vaccines.

Most international relief and development groups praised Mr. Gates for giving so much money to an area that receives relatively little private support. Richard M. Walden, president of Operation U.S.A., in Los Angeles, says his only concern is that the money is used to help get immunization shots into the arms of children and does not “get eaten up by studies, conferences, and software.”

To advise them on how best to follow through on their philanthropic desires, the family assembled a panel of world-health experts. Bill and Melinda Gates invited many of those experts to their house recently to sort out some of the final details of the $100-million grant before it was announced.

“We had 17 people around one table holding a single conversation for more than two and a half hours,” recalls Dr. Perkin. “It was really an incredible evening. Bill and Melinda kept asking questions and encouraging the group to think even more broadly.”

Gifts that rival the scope and size of the vaccine grant could one day become commonplace for the Gateses. Mr. Gates has said that he hopes to distribute most of his wealth during his lifetime. That means that even if he expects to live to be 100, he would have to give away significantly more than $1-billion a year, on average, based on the current value of his personal assets.

By comparison, the Lilly Endowment, which currently holds the top slot among American foundations, with assets of about $14-billion, expects to distribute less than half that amount in grants this year.

Even before Mr. Gates turns over the bulk of his fortune, the Gates Foundation will have to start increasing its giving to meet a federal requirement that foundations give away at least 5 per cent of their assets a year. But the family’s advisers say all new projects will still have to deal with one of the foundation’s main interests: education, global health and population, or local causes in the Pacific Northwest.

“It’s hard to say No when you have the resources they have,” says Patty Stonesifer, a former Microsoft senior vice-president who runs the Gates Library Foundation. “But they consider the money to be a very limited set of resources compared to the societal ills. So they’re looking for the handful of things they can have enormous impact on instead of the hundreds and hundreds and hundreds of things that they could have some impact on.”

As the Gateses expand their philanthropy, their advisers say one area that is likely to grow is spending to help infants and toddlers.

Ms. Gates is currently leading a state commission with Mona Lee Locke, wife of Washington’s Governor, to look into ways that programs for young children can be improved based on recent research findings that show that a child’s experiences during the first three years have a deep and lasting influence on how his or her brain develops and functions.

Most gifts the Gateses have made thus far to help young children have been limited to groups in the Pacific Northwest rather than national efforts. For example, the Gateses gave $1.2-million recently to build the Adelle Maxwell Child Care and Development Center, which operates in the neighborhood where the Gateses live in Redmond, Wash. The center seeks to provide high-quality day care to children of parents who are homeless or live in temporary housing.

Despite the William H. Gates Foundation’s recent growth, the fund is still very much a home-grown affair. Since its creation four years ago, it has been headed by Mr. Gates’s father, William H. Gates, Sr., and is run out of the elder Mr. Gates’s basement in Seattle. This month, the foundation published its first annual report and made available a new Web site (http://www.gatesfoundations.org) to help explain its activities. It also recently hired an assistant director, Suzanne Cluett, to help the senior Mr. Gates part time.

But no additional employees are expected any time soon. Bill Gates, the foundation’s sole trustee, says it is important to him to keep grant-making decisions within the family. “Between Melinda, my dad, and I, we like to be in a position to read all materials and, with modest support, be able to make key decisions,” he says.

Many of the grants so far have come about because of longstanding relationships that members of the Gates family have developed with people in the non-profit world. Before the $100-million vaccine grant was awarded to PATH, for example, the charity had received two smaller grants from the foundation. And Ms. Cluett, the Gates Foundation’s associate director, used to work for PATH.

“Sometimes grants get made on the basis of personal knowledge and confidence in the individuals involved,” says the senior Mr. Gates. “But I think that’s true with almost all grant making where the grantor is still alive.”

The foundation does pick a few grant recipients from the proposals it receives through the mail, despite the foundation’s official policy of not accepting unsolicited requests. Mr. Gates, Sr., says such proposals should be kept brief.

That approach paid off for the Global Health Council, a policy group in the District of Columbia. This month it received $300,000 to design a revamped Web site to help health professionals around the world locate the latest disease-related information on the Internet. Nils Daulaire, the council’s president, says one month after he sent the foundation a seven-page proposal, the elder Mr. Gates presented him with a check.

Even with the recent $100-million gift announcement and the $1-billion addition to the Gates Foundation’s assets, Bill and Melinda Gates “are very much in a start-up stage of their philanthropy,” Ms. Stonesifer says.

Some people, however, say they wish America’s wealthiest man would move faster and give away a chunk of the billions he holds. Harry J. Saal, a high-technology entrepreneur who is chairman of the Community Foundation Silicon Valley, says that while he is encouraged by Mr. Gates’s recent donations, they amount to little when measured against his net worth. “If I were in Gates’s shoes, I’d really like to encourage other people to be very generous and to set a model for them,” says Mr. Saal. He says he wishes that Mr. Gates and other billionaires would calculate their giving in terms that others could follow, such as annually giving away a month’s worth of income or earnings.

But as long as Mr. Gates remains in his post as head of Microsoft, he is unlikely to start doling out large percentages of his wealth. That is because most of his net worth comes from his Microsoft stock, and giving away shares could diminish his ability to control the direction of the corporation. Currently Mr. Gates owns 500 million shares — about one-fifth of all Microsoft stock.

Mr. Gates, Sr., says he has little patience for those who criticize his son for not giving away more now. “He’s clearly becoming one of the major givers in the world,” he says. “I don’t think he has anything to apologize for.”

Mr. Gates himself is resigned to such controversies: “Until we give it all away, I’m sure there will always be people who have great ideas about where we could give it.”

Besides, Mr. Gates insists that he’s not concerned with carving out a place in history as a major philanthropist. While he says he admires the work of titans like Andrew Carnegie, whose gifts built the nation’s public library system, Mr. Gates says he is only thinking about the present. “I’m motivated by the here and now, seeing kids using computers in these libraries, or talking to these world health experts about how they go out to these clinics and see the sick children,” he says. “Everything we’re doing is about its impact today.”